The U.S. Treasury has postponed making a decision on whether to allow banks in real estate brokerage and property management until 2003. Is this a retreat or a surrender by the banks from the NAR's viewpoint?

"It's coincidental that the postponement occurred the week following delivery of notice that there are now 220 members of the House of Representatives that are cosponsors of the legislation," says Martin Edwards, Jr., President of the National Association of Realtors, "and there is a companion bill before the Senate that already has the support of 10 U.S. Senators."

The legislation to which Edwards refers is the Community Choice in Real Estate Act, (H.R.3424, S.1839) which would prevent a proposed regulation being considered by the Federal Reserve Board and the U.S. Treasury Department to allow banks in real estate brokerage and property management.

The NAR has chosen to fight regulation with legislation. By choosing the regulatory route, big banks would be empowered by government monetary systems controllers, the regulatory bodies that oversee banking activities, to own real estate brokerage and management companies. But such a regulatory endorsement would give banks unfair competitive advantages over existing real estate brokerage businesses, says Edwards.

"We aren't talking about even ground - they have insured depository capital, and I (brokers) have to borrow money to be in business," explains Edwards. "That's not a level playing field."

To fight the regulation, which was proposed over a year and a half ago, the NAR has rallied more than 265,000 of its members to send letters to the White House, Congress, the U.S. Treasury, and the Federal Reserve in opposition of large national banks entering real estate and asking federal legislators to cosponsor a bill that would prohibit such involvement.

In addition, the NAR lobbied legislators, who responded with the introduction of the Community Choice In Real Estate Act, H.R.3424. A corresponding bill, Community Choice In Real Estate Act, S.1839, was introduced weeks later before the Senate.

Why is the NAR fighting banks so hard? NAR opposes allowing large banking conglomerates to enter real estate brokerage and property management under the guise of the Gramm-Leach-Bliley Act because it will lead to higher costs to consumers, large scale consolidation in the real estate industry, and potential conflicts of interest should banks be able to steer homebuyers to their own insurance and loan products.

"The market will soon be dominated by a smattering of large banking conglomerates whose primary goal is to cross-sell various financial products, not to put people in homes and commercial properties. The end result will be fewer choices for consumers, higher fees and less competitive loans,” insists Edwards. "The regulation would be detrimental to the national economy and to consumers."

The NAR also represents brokers and their agents, as well as views itself as a watchdog on behalf of homebuyers and sellers. According to a recent poll of its members, 96 percent oppose banks in real estate. Of those, 84 percent of brokers are in opposition. Why is the consensus lower among brokers than their agents?

"Some brokers have an exit strategy in place, but that is not the direction for 96 percent of the membership where every member gets a vote," says Edwards.

Edwards said that if the banking lobby does not withdraw its request, NAR will continue its campaign to stop the regulation.

"It's also no coincidence that the Senate Financial Institutions Subcommittee has recently announced hearings. Nor is it a coincidence that this request by the banks, first proposed in January 2001, has yet to be approved due to the tremendous public opposition it has created. Within three months, you have a majority of the House supporting the legislation. It's time for the banking lobby to face reality and comply with congressional intent and the public interest," says Edwards.

But the banking lobby has yet to raise the white flag.

"They postponed any decision until next year, but this isn't the time for celebration," vows Edwards. "It is time for confirmation that our legislation is right, and that it is not the intent of Congress to mix banking and commerce.